Koch v. Sheehan

On October 22, 2013, the New York State Court of Appeals decided the case, Koch v. Sheehan, 2013 NY Slip Op 06804 (N.Y. Oct. 22, 2013).   In Koch, the Court of Appeals held that the Office of the Medicaid Inspector General (OMIG) was legally permitted to automatically exclude a physician from the Medicaid program, based solely upon a Consent Order entered into between the physician and the New York state medical licensing board (OPMC), regardless of whether or not the Consent Order provided that the physician’s license be suspended or revoked. Moreover, the Court of Appeals did not require that OMIG conduct its own independent investigation of the underlying facts before issuing the exclusion. In its decision, the Court of Appeals disagreed with the March 23, 2012 decision of New York Supreme Court, Appellate Division, Fourth Department, which held OMIG was required to first conduct an independent investigation before issuing the exclusion.  Notably, the Court of Appeals reached its decision after recognizing the potentially catastrophic consequences that flow from a Medicaid exclusion, which could include automatic exclusion from the more prevalent Medicare program, loss of participation in managed care panels, the termination of medical staff membership at hospitals, and disqualification from serving as an employee for another Medicaid provider. Indeed, the Court of Appeals expressly cautioned attorneys, representing clients in these matters, that a settlement with OPMC does not bind OMIG, even though OPMC and OMIG are both “units” within Department of Health.